Mekorot, the National Water Company of Israel

Remarks by Angel Gurría, OECD Secretary-General during the Official visit to Israel

Tel Aviv, Israel, 06 June 2012

(As prepared for delivery)

Minister Landau, Mr. Ben Hamo, Ladies and Gentlemen,

It is a great pleasure to visit Mekorot, one of the world’s most technologically advanced national water companies. I am honoured to be addressing this distinguished and experienced group of people, and look forward to discussing some of the main challenges and technological advances relating to water policy in Israel today.

I don’t think I need to tell you that the world’s environmental resources are under enormous pressure – especially water. In the 20th century, the world population grew 4 times, economic output 22 times and fossil fuel consumption 14 times. Over the same period, water demand rose twice as fast as population growth.

The environment will continue to be under tremendous strain in the decades to come unless action is taken to reverse the trend. The OECD Environmental Outlook to 2050 projects that, unless we take ambitious new policy action, water demand will increase by 55% by 2050. Cities, farmers, industries, energy suppliers, and ecosystems are increasingly competing for their daily water needs. Even more alarmingly, nutrient flows from inadequate treatment of wastewater are projected to increase threefold by 2050 under business-as-usual policies.

It is also likely that the continued depletion of groundwater supplies in some agricultural areas will further hinder the ability of countries to produce the food they need, posing an enormous risk to national and global food markets.

In short, the costs of continuing to poorly manage our precious water resources are increasing, certainly from a financial perspective, but also in terms of lost opportunities, compromised health, and environmental damage. We need immediate and targeted policy action in response to these challenges.

In the water sector, as in many areas, innovation will be key.

I am fully aware of the challenges Israel has faced in relation to water since its establishment. Accelerated population growth - along with economic growth - has placed additional pressure on Israel's already limited water resources. Today, management of water resources is one of the major challenges confronting the country. These challenges are compounded by the transboundary nature of river flows in the region.

Despite these challenges, Israel should be proud of being at the forefront of green innovations for water management; these innovations can be decisive in managing scarce water resources. I can think of numerous examples, including innovative water technologies (such as drip irrigation), the development of new techniques (such as using membranes to improve water quality), and the use of alternative sources of water (such as water recycling and re-use).

I would like to briefly touch upon three key factors the OECD believes have put Israel at the forefront of good practice in water management:

First, water scarcity and prices for water that appropriately reflect this scarcity have provided a stimulus for innovation in water technologies and the emergence of an internationally competitive sector.

Second, “full recovery of the costs of supplying water’’ is an established policy principle, even if not yet a reality, including for the agricultural sector. This remains a challenge in most other OECD countries.

Third, Israel has a unique system of water governance, with the Water Authority overseeing a national water grid. The system is highly centralised and helps to ensure coherence and coordination across different policy areas, including water, energy, agriculture and industry. Israel’s experience can provide interesting lessons for other OECD countries.

But, of course, like any other country Israel still faces some significant water policy challenges. Let me provide just a couple of key examples.

First, around one-third of agricultural use of potable and reused water is still cross-subsidised by the household sector and receives a relatively large share of public support. The 2006 agreement with farmers which aims to establish a target price “in the direction of full cost recovery” by 2017, is welcome in this respect.

Second, the recent OECD Environmental Performance Review of Israel found that the system of water management has clear benefits. But it does not always give sufficient weight to environmental considerations. This may become even more constraining in future years as the water challenges associated with climate change start to bite. Flexible and responsive governance systems, coupled with continued innovation, will be essential for tackling the challenges of climate change. I am therefore delighted to hear about some of the most recent innovations here today.

Ladies and Gentlemen,

We need immediate and targeted worldwide action to ensure the future of our precious water resources. Israel has a wealth of experience and best practice in water management to support this.

At the OECD we very much appreciate your willingness to share your expertise and contribute actively to this crucial debate. In turn, the OECD will continue to provide the support necessary for Israel to tackle the challenges that remain.